already been poured on the building he had in mind. After looking over the Insta-System, which planned to sell milkshakes, French fries, and hamburgers, he abandoned the Dairy Queen idea in favor of joining Cramer and Burns.
Before the restaurant opened, Dave suggested that they change the name from Insta-Burger to Insta-Burger King. He also drew a picture of a king character sitting on a hamburger with his arms around a milkshake and gave the sketch to Cramer and Burns with the suggestion that they use it as a trademark. The restaurant later opened as Insta-Burger King, with a sign featuring the king on the bun sitting on top of a pylon that extended vertically twelve feet above the roof of the building. The Insta- name was prominently displayed on the front fascia of the building, and the name Burger King appeared just beneath it.
The agreement with George Read was changed to provide that the name of the restaurants opened in future would bear the name Insta-Burger King. It also provided that the king on the bun symbol, along with the name Insta-Burger King, would be used as trademarks and service marks. These were already registered in Washington by Cramer and Burns. Dave expected nothing in return, and he received nothing. This first use of the Burger King name was destined to become one of the most popular and widely known brand names in the world.
Dave contracted with Cramer and Burns to build the second Insta-Burger King drive-in restaurant in Miami. In contemplating this, he realized that he needed additional capital if he was ever to expand this business concept any further. He felt that operating just a single self-service drive-in wouldn’t make economic sense. He set about attracting a partner who could help supply additional capital and assist him building the business. Returning to Miami, he went to see Harvey Fuller, who owned a restaurant on Flagler Street. Harvey was one of Miami’s better-known restaurateurs, whom I went to see when I was building the Brickell Bridge Restaurant. It was Harvey who encouraged me to join the Miami Restaurant Association, where I was later elected president. Harvey took a serious look at Dave’s idea, and although he was attracted by it and thought the idea had some promise, he wasn’t inclined at his age to invest in an unproven business concept of this sort. He suggested that Dave talk to me about it. Dave took the suggestion, and this resulted in the two of us getting together.
Dave opened his Insta-Burger King on March 1,1954, at 3090 NW 36th Street in Miami. The building and the paved parking lot cost $13,000, which gives some idea of the modest nature of the facility. Dave didn’t have the means to build this building by himself, but he was able to convince the owner of the property to build it and lease it back to him. Dave’s Insta-Burger King was the second restaurant using that name, but it attracted only a modest amount of interest from the public, averaging sales of less than one hundred dollars a day. The Insta-Burger King concept was a novel experiment in food service at that time, and the public simply wasn’t ready for it. Even so, Dave felt confident that in time the public would become familiar with it and that business would ultimately pick up.
Prior to this time very few restaurants in the country offered self-service as a way of serving customers. This system required customers to come up to an ordering window, pay in advance, and wait for their order to be filled. Food was placed in paper trays or put in paper containers and paper bags. In the early 1950s this was a completely new and different style of service unfamiliar to restaurant patrons. After being served, customers had an option to eat in their cars or on seats provided on an open patio adjoining one side of the building. In 1954 in Miami that idea was unproven, unfamiliar, and unpopular. Business continued to be slow, but Dave was intrigued by the idea of a restaurant with a limited menu, fast service, and low prices. His enthusiasm was very evident on those occasions when we had dinner together at my Brickell Bridge Restaurant. He stopped by often during the time his new restaurant concept was getting ready to open.
As we came to know each other better, Dave stepped up the pressure to join him as a business partner. He had invested almost all of his available capital in opening this first store. I must admit that the idea did intrigue me. I had sold my first restaurant, the Colonial Inn, a few months earlier, and for the first time in my life I had a little capital available. I thought carefully about the implications of joining him as a business partner.
The Brickell Bridge Restaurant was doing well at the time, but it was obvious to me that this purely commercial-type restaurant could never be developed into a multi-unit chain operation, and that was really what I had in mind. With Dave continuing to insist that I come out to see his new Insta-Burger King, I sensed that this might be an opportunity worth looking into. I accepted his invitation and agreed to take a look at it whenever he opened for business.
One evening in April, Nancy and I drove out to 36th Street to meet Dave and see what his new enterprise was all about. I was intrigued with the cleanliness and brightness of the place, but what attracted me the most was the simplicity of the operation. I couldn’t help but agree with Dave that this idea had the potential to be developed into a chain of restaurants. After our initial visit, Dave stepped up his persuasive appeal to join him in this venture. I liked Dave and thought that we would make a good team and enjoy a compatible working relationship. My problem was coming up with the capital necessary to match Dave’s investment. This would require that I sell the Brickell Bridge Restaurant, and this in turn would shut off my source of income.
From the beginning we spoke in terms of making equal investments so the two of us would become equal partners. I thought this was a reasonable and fair approach, but first I needed to confirm what Dave had told me about his capital investment and the profitability of the business. I asked him to let me look over whatever financial records he had in this regard. I planned to match whatever investment he had made, so information of this sort was necessary before I reached a final decision.
One must understand Dave Edgerton a bit in order to appreciate the fact that here was a guy who never focused very much on details, particularly those concerning financial matters. Accounting, financial issues, and money matters simply didn’t interest him. Dave was a highly creative and extraordinarily bright person, predisposed to think mostly in conceptual terms. He told me that the business, even with low sales, was making a respectable profit.
He had only been open for six or seven weeks and said, “Jim, I don’t have a financial statement or a set of books. I have been accumulating sales information which shows how much money we have taken in each day, and I can show you what I have paid out and let you look at my checkbook, but I haven’t got a profit and loss statement or a balance sheet to show you.” I said, “Dave, why don’t you just gather up whatever records you have and deliver them to my accountant, Hugh Shillington, who is a CPA. He can prepare a financial statement for you. This should affirm the level of investment you have made in the business, and it should also show you how profitable the business has been since you opened.”
This was acceptable to Dave, who had previously told me that the business was already profitable, although he didn’t have the exact figures to prove that. Citing the restaurant’s ability to deliver low labor costs, he speculated that the operation was producing a profit of close to 28 percent of sales. I could hardly believe that this small business could produce such a high margin of profit on such limited sales, but I did accept the idea that this was a profitable business. Dave delivered his “books,” which were papers of all kinds stuffed in a peach basket, a container he had picked up from the local produce market. He simply threw in his sales records, checkbook, and various invoices representing the purchase of his equipment, bills representing pre-opening expenses, and miscellaneous expenses he had incurred in opening and operating the business. Several weeks later Mr. Shillington presented a financial statement on David Edgerton—sole proprietor and owner of the Insta-Burger King business located at 3090 NW 36th Street, Miami, Florida. The statement was at considerable variance from Dave’s estimate of the operating results. Not only was he not making 28 percent profit on sales, the report stated that he had actually lost 56 percent on the sales he had been able to generate up to that point.
Why was I willing to invest in a business that was reporting such dismal results? The answer is that the financial statement covered
